A borrower has a 30-day rate lock at 6.5% that expires in 5 days. Interest rates have dropped to 6.0%. What is the borrower's best option?
Correct Answer
C) The borrower should ask about a float-down option if available
Rate locks typically protect borrowers from rate increases but don't automatically provide lower rates. However, some lenders offer float-down options that allow borrowers to capture lower rates during the lock period, usually for an additional fee.
Why This Is the Correct Answer
Rate locks typically protect borrowers from rate increases but don't automatically provide lower rates. However, some lenders offer float-down options that allow borrowers to capture lower rates during the lock period, usually for an additional fee.
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An MLO works for a company that pays a base commission plus an additional 'complexity fee' for loans that require more than 20 hours of processing time, regardless of loan terms. The complexity fee is the same dollar amount for all qualifying loans. This additional compensation: